Hut 8 seeks to dismiss shareholder lawsuit following 23% stock drop

Bitcoin (CRYPTO:BTC) miner Hut 8 Corp has filed a motion to dismiss a class-action lawsuit that was filed by its shareholders, arguing that the lawsuit is a result of a short-seller’s actions aimed at profiting from a short position.

In a court filing on December 2, Hut 8 stated that the lawsuit arose from a report published by short-seller J Capital Research in January.

The report claimed that Hut 8 overpaid for its acquisition of US Bitcoin Corp (USBTC), hid operational issues at a facility in Texas, and misrepresented ownership shares.

Hut 8 contended that the case was part of a “short and distort” scheme, where short sellers try to manipulate a stock’s price for their benefit.

The company argued that these types of lawsuits often follow short-seller reports, with shareholder class actions falsely claiming that the short-seller’s negative views were “corrective disclosures.”

Following the publication of J Capital's report, Hut 8’s stock dropped by 23%.

This led to several shareholder lawsuits in March from investors who claimed that they had suffered losses and argued that all shareholders who purchased Hut 8 shares during the period should be compensated.

However, Hut 8 pointed out that the company’s stock price has since risen by approximately 300%, fully recovering from the drop.

The company emphasised that many of its statements were protected by "safe harbor provisions" and that it had already disclosed risks related to USBTC’s limited operating history.

Hut 8 concluded that the shareholder complaint should be dismissed, as it failed to prove that any statements made by the company were false or that investors had been harmed.

Hut 8’s stock closed 3.6% down on December 3 but had gained 99% for the year, with a 296% increase from its January low of $6.33.